Shepherd v. Kennedy et al.

(Filed: Aug. 27, 2026)

Kelsey, a professional counselor born and raised in Spring Lake, Michigan, received a $75,000 student loan repayment grant from the National Health Service Corps ("NHSC") in 2022. However, because of her health needs and the needs of her family, she needed a job close to home, with a livable schedule. It wasn't until more than three years later that she finally learned that her new employer would not qualify as a Program site.

Right away, Kelsey offered to return the grant—every dollar of the $75,000. The NHSC refused to accept it unless she paid a fine of more than $250,000 on top of the $75,000. While her request to waive the penalty and remaining service obligation was pending, the government sent the debt she is actively contesting—more than $355,000 plus interest—to collections. Then, in April 2026, NHSC garnished Kelsey's 2025 federal tax refund of more than $3,500.

Kelsey argues that the fine and the government’s efforts to collect it violate the U.S. Constitution's Eighth Amendment Excessive Fines Clause and the Seventh Amendment right to trial by jury.